In Australian Family Law, the commonly known term, ‘prenup’ or ‘pre-nuptial agreement’ is correctly referred to as Binding Financial Agreement. There are many benefits to entering a Binding Financial Agreement. All couples who are contemplating marriage or entering a de facto relationships should consider having one drawn up.

Binding Financial Agreements in Australia can generally cover all financial matters. They can be entered before, during and after the relationship or marriage ends. The Binding Financial Agreement allows parties to determine the division of assets, liabilities, property and superannuation, whether acquired before, during or after the marriage or a de facto relationship ends.

Related Article: Binding Financial Agreement

Requirements for the Agreement to be Considered Binding

1. Each party must receive independent legal advice from an Australian lawyer before signing the Binding Financial Agreement.
2. The Binding Financial Agreement must comply with strict legal guidelines, as outlined in the Family Law Act (1975).
3. Each party must sign the Binding Financial Agreement voluntarily, free from coercion and duress.
4. The Binding Financial Agreement must be in writing.
5. The Binding Financial Agreement must disclosure each party’s financial position.
6. To minimise the risk of the Binding Financial Agreement being set aside, the agreement should provide for an outcome that is within the range of what property adjustment orders would be made by the Family Court ie. The terms are fair and considered. Do they take into account the personal circumstances of the parties now and in the future? 

Benefits of a Binding Financial Agreement

1. Protection of Assets: Protects assets obtained or acquired before the relationship including, inheritance, property, family heirlooms and family businesses.
2. Protection of Children: Ensures YOUR children are financially protected as you enter a new relationship.
3. Clarity: Parties can set out precise details as to what will happen with each of their financial affairs in the event of separation or divorce.
4. Facilitate a Smooth Separation or Divorce: Animosity towards each other and disagreement about finances can lead separating couples to enter expensive litigation in the Family Court. Going to Court will takes a significant toll financially and emotionally. 
5. Security: One of the most important benefits of a Binding Financial Agreement is giving parties peace of mind. 
6. Tax Benefits: Parties who are to receive or exchange property may save on Capital Gains Tax and stamp duty if certain conditions are met.
7. Minimise Cost: The cost of family law litigation following separation or divorce can be huge If parties can’t agree on how to divide their finances, they may end up in protracted litigation in the Family Court. Although a Binding Financial Agreement is expensive to prepare, going to Court will be much more expensive in the long run.

Setting up a Binding Financial Agreement is not about setting up the relationship to fail. Binding Financial Agreements are a safeguard for the future. As the saying goes, “Nobody plans to fail, but many fail to plan”.

If you need assistance or have any questions about Binding Financial Agreements, phone us for a FREE consultation.